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1.1 Overview

Key offers one of the most comprehensive and elite Positive Pay services available, including Same Day, Next Day, Payee Name Verification (PNV), Teller and Teller Payee. These services help you to strengthen your internal controls with fraud detection reporting by comparing items presented for payment against the check details provided in your issue file. Any checks that do not match are presented to you for review and payment disposition (pay/no-pay decisions).

Same Day Positive Pay (with or without PNV) requires a controlled disbursement account (CDA). This powerful tool affords you the opportunity to review suspect items presented for payment before they post to your account later that same day. Because these items have not yet been posted to your account, any items you stop will not appear on your statement or in other reporting. Reconciling the account is cleaner and easier.

Next Day Positive Pay (with or without PNV) works with a demand deposit account (DDA). It can also offer a day two look at items for Same Day users. Exception items presented next day have already posted to the account. If an item is returned, it will appear as a debit to the account for original presentment and then as a credit for the return.

Key is one of few institutions to offer PNV review through four channels: the internet, your mobile phone, our teller lines and via your Account Reconcilement Plan (ARP) reports. PNV is available with both Same Day and Next Day services.

Key also offers comprehensive e-check (checks inadvertently converted to electronic/ACH transactions) reporting with payee names on the report.

As part of Key’s Positive Pay services, you will benefit from fraud detection at Key branch teller lines with Teller Positive Pay and Teller Payee, reducing check fraud at all points of check presentment. Our systems allow Key to verify that a check presented over the counter at our branches conforms to the issue information that you provided. If an item is presented to the Key teller that is not on your issue file, the check will not be negotiated by the teller and the individual presenting the item will be referred to the maker of the check.

1.2 Best Practices

Disposition Default

Set for each account at implementation, the default disposition will be automatically applied to all exception items if no action is taken by the deadline. The options are Pay-All or Stop/Return-All. When choosing your default, consider all the ramifications of this default and the possible impact to payees.

If an account is Pay-All, the online report will allow you to stop (for Same Day Positive Pay) or return (for Next Day Positive Pay) items you do not want to pay. If no action is taken on one or more items, the default will be applied at the deadline – the items will be paid. Any items marked for stop/return will be stopped/returned.

If the account is Stop/Return-All, the checkbox for the stop/return will be preselected online, you will need to uncheck the box to remove the default stop/return to allow the item to pay. If no action is taken on one or more items, the default will be applied at the deadline – the items will be stopped/returned. Items that were unchecked will be paid.

Exception Items Overview

Exception items are items that do not match your issue file. Items may be reported as exceptions if we detect a difference between the information contained in your issue file and the information on the presented check. For example, if the amount reported on your issue file differs from the amount of the check that was presented for payment, the item will be reported back for your review.

Positive Pay reports must be reviewed every day to detect and prevent possible fraudulent items from posting to the account. Windows of return are short and must be adhered to.

Check Issuance Timing and Teller Positive Pay

To avoid any issues with your payees cashing or depositing checks, issue information must be sent to Key before disbursing checks. This can be done by direct transmission, file transfer via KeyNavigator, or through manual keying via KeyNavigator.

If a payee wishes to cash a check at one of our Key branches on the same business day that the checks are distributed (you hand the payee the check and payee goes to a Key Branch), it is imperative that Key first receive the corresponding check issue data. Specifically, if submitting your check issuance file via KeyNavigator File Services section or by adding a check issue record via the KeyNavigator Check Issue Maintenance feature, the check issue data must be received by Key 30 minutes before the payee would attempt to cash the check at a Key branch. If submitting your check issuance file via direct transmission, the check issue data must be received by Key 90 minutes before the payee would attempt to cash the check at a Key branch, so that the file can be loaded to the teller system. Payees wanting to cash checks at a branch on the business day you distribute them, where Key still does not have a corresponding issue record, will be turned away at the Teller line. These checks, however, may be deposited to a payee’s Key account or into an account at any other bank.

The Teller and Teller Payee Positive Pay features, upon final Positive Pay service implementation, will default to ‘on’ unless otherwise instructed. Should you have a problem/delay with sending Key check issuance information, where check issue information is not delivered timely to Key, the attempt to cash an associated Positive Pay check at the Teller line will be rejected. However, although not recommended, you can temporarily remove the account from Teller Positive Pay for one day by contacting your Payments Advisor. Indicate that it is for one day only.

NOTE: turning off the feature for Teller review of your items adds financial loss risk to you for items being presented and cashed at the Key teller line. Items presented at the Key teller line, for accounts with Teller Positive Pay turned off, are cashed based on account balances and not on your issuance information. By turning Teller off, you are saying it is okay to cash items without Positive Pay review. This is NOT recommended.

Check Issuance Daily Review

Every day, you should validate that all of your check issues are in the Positive Pay system. This simple review ensures that Positive Pay will not present valid checks for your review along with the real exceptions. If an issue is not sent and processed, the item will have nothing to match against when presented for payment and will therefore be considered an exception too. Avoiding this situation makes the Positive Pay review much simpler.

This daily issuance review is especially important if you have multiple locations within your company creating and distributing checks.

Secondary Authorization

For accounts that have the Stop/Return-All default, if an item is marked to ‘pay’ on the daily report, you can enable a feature to require a second person to approve paying the item. Use of this feature eliminates the possibility of a single person having the authority to pay an item that was reported as an exception or suspect in the positive pay reports. This feature combats internal check fraud.

At Least Two People with Credentials

It is suggested that all accounts have at least two people with KeyNavigator credentials to disposition an item in Positive Pay. This avoids interruption in the daily review process should one person take vacation or be out on leave. Suspending Positive Pay during vacation is not recommended – if that becomes your known practice then that becomes the time for fraud to occur.

Activate KeyNavigator Mobile for Decisioning Positive Pay

KeyNavigator Mobile is a great way to decision your Positive Pay exception ‘on-the-go’. Talk to your Payments Advisor for more information.

Positive Pay and Payment Protection

If you were a Payment Protection client prior to implementing Positive Pay, you may be comfortable with that process and initially uncomfortable with Positive Pay. During testing – and initially in production – you should become more comfortable with the Positive Pay screens and reports. Be sure to make your pay/no-pay decision of Positive Pay exception items on the Positive Pay screens and NOT on the Payment Protection screen. This will allow the Positive Pay history to build and will aid in research, if needed later. It is strongly suggested that Payment Protection be turned off when Positive Pay is turned on to avoid confusion.

1.3 Payment Descriptions

When reviewing your Positive Pay exceptions online each item will have one of the following reason codes:

  • Check Not on Issue File – Client didn’t send in their issue file or the file did not contain all of their issues
  • Conflicting Amount – The amount presented does not match what was on the issue file
  • Duplicate Presentment – Item was previously presented
  • Issue Stale Dated – Client option: number of days set by client; compares issue date with presentment date
  • Payee Name Conflict – Payee Name presented does not match what was on the issue file
  • E-Check Not on Issue File – Item has been inadvertently converted to e-check and is not in the issuance data provided by the client
  • Exceeds Authorized Amount – Client option: all checks over X amount will be presented as a suspect